* Adds to complex economic panorama for Maduro
* Growth also slowing, shortages proliferating
* Opposition slams government over latest price data
By Andrew Cawthorne and Eyanir Chinea
CARACAS, June 6 Venezuela's inflation hit a
record monthly high of 6.1 percent in May, compounding new
President Nicolas Maduro's economic headaches less than two
months after taking office in the OPEC member country.
Last month's consumer price rises, up from 4.3 percent in
April, took Venezuela's annualized inflation rate to a startling
35.2 percent, the highest in the Americas.
This adds to a complex panorama of slowing economic growth,
widespread shortages of basic products, and political tension
over Maduro's narrow election victory to replace late socialist
leader Hugo Chavez.
"They are very, very scary figures. There is a very
significant risk now of going from stagflation (rising inflation
and slowing growth) to hyperinflation," Goldman Sachs analyst
Alberto Ramos said.
"We are really playing with fire here," he added, saying
there was little sign of corrective monetary measures from the
government's economic team.
The May figure was the worst under a new measurement system
started in 2008. The worst previous monthly figure, under an old
measurement based on major cities, was 7.1 percent in 1996.
Accumulated inflation for the first five months of this year
was 19.4 percent, compared with 6 percent during the same period
of 2012 and busting the official 2013 target of 14-16 percent.
May's rise was led by food and non-alcoholic drinks, which
rose 10.0 percent, the bank said in a statement.
The new data will fuel critics' accusations of economic
mismanagement by Maduro at a time when his April election win is
still being disputed by opposition leader Henrique Capriles.
In a complicated scenario for Maduro, and for many
Venezuelans struggling to make ends meet, economic growth slowed
sharply in the first quarter to 0.7 percent, from 5.9 percent in
the same period a year earlier.
A lack of hard currency has left businesses struggling to
import key consumer products. Long queues at shops, and even
scuffles, have become common as Venezuelans face shortages of
basic goods from toilet paper to wheat flour.
"That's how they rule," opposition leader Henrique Capriles
said on Twitter, expressing disgust at the inflation figures.
"Don't be surprised if they start manipulating the figures
now ... In one month, we have inflation above the average for
Latin America throughout 2012."
A devaluation of the bolivar currency in February, and heavy
government spending throughout 2012 when Chavez won re-election,
have exacerbated price pressures in Venezuela, which has for
decades suffered high inflation.
The government seeks to minimize the impact on the
population via price controls on some basics, and the provision
of free or subsidized groceries, healthcare and other welfare
services. Officials frequently blame unscrupulous businessmen
for price-gouging and hoarding of products.
The government also points out the average inflation under
Chavez's 14-year rule was less than that of predecessors Rafael
Caldera and Carlos Perez, who lurched from crisis to crisis.
Henkel Garcia, of the local economic think-tank
Econometrica, said a 20 percent rise in the minimum salary had
compounded the inflationary impact of February's devaluation.
He predicted annual inflation of 40 percent, and said
another devaluation looked probable.
Vice President Jorge Arreaza said the government's enemies
were deliberately stoking a sense of disaster in Venezuela as
part of a wider destabilization campaign.
"Those who go round announcing economic chaos and false
devaluations are the same enemies of the fatherland who have
been in constant action since 2001. Be on alert!" he said,
referring to the buildup of pressure prior to a brief coup
against Chavez in 2002.
Most economists believe lowering inflation will require
cutting, or at least putting the brakes on, state spending. But
Maduro's popularity depends in large part on keeping the heavy
outlays of the Chavez era to finance generous social assistance.
Critics say years of nationalizations under Chavez limited
the country's capacity to produce its own goods, while currency
controls have left many importers short of hard currency.
Venezuela devalued the bolivar currency to 6.3 per dollar in
February, from 4.3, in a move meant to help shore up government
finances stretched by the heavy spending in 2012. But sales of
hard currency at that rate are heavily restricted.
"I think it's clear that the rise in inflation is coming from
import prices, which are increasing because of importers' lack
of access to dollars at the official rate," said Mark Weisbrot,
an economist at the Washington-based Center for Economic and
"From mid-2010 to the last quarter of last year, inflation
was falling even as economic growth accelerated. This can be
repeated if the government chooses the right policies."